Severino and Secretary, Department of Family and Community Services

[2005] AATA 745

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 745

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2004/1405

GENERAL ADMINISTRATIVE  DIVISION		)
Re		CONCETTA SEVERINO

Applicant

And SECRETARY, DEPARTMENT OF FAMILY AND COMMUNITY SERVICES

Respondent

DECISION

Tribunal REAR ADMIRAL A R HORTON AO

Date5 August 2005

PlaceSydney

Decision The decision of the SSAT is set aside to the extent that whilst the outstanding balance of the first debt of $5,180.66 is waived, a further $8,191.45 of the second debt of $16,382.89 is waived.

[Sgd] Rear Admiral A R Horton  

CATCHWORDS

SOCIAL SECURITY – disability support pension – periods of casual employment – requirement to advise Centrelink of increases in income – data matching with ATO – alleged discrepancies in declared income – overpayment debts raised – amount of first debt reduced by Social Security Appeals Tribunal – consideration of amount of raised debt – special circumstances – decision under review is set aside and 50% of raised debt is waived.

Social Security Act 1991 - sections 1223, 1236, 1237A, 1237AAD

Sekhon v Secretary, Department of Family and Community Services (2003) FCAFC 190

Re Beadle and Director General of Social Security (1984) 6 ALD 1

Re Colaiacolo and Secretary, Department of Social Security (1985) AATA 2109

Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464

Re Secretary, Department of Social Security and VYS (1995) 40 ALD 745

Re Secretary, Department of Family and Community Services and Jonauskas (2001) 65 ALD 553

Re Secretary, Department of Family and Community Services and Clark (2004) 76 ALD 510

Dranichnikov & Ors v Centrelink & Ors (2003) 75 ALD 134

REASONS FOR DECISION

5 August 2005   REAR ADMIRAL A R HORTON AO        

1.      This is an application to the Administrative Appeals Tribunal (“the Tribunal”) to review a decision of the Social Security Appeals Tribunal (“the SSAT”) of 1 October 2004 which set aside a decision of an Authorised Review Officer (“ARO”) of 13 August 2004 and waived the balance outstanding of a first debt in respect of the disability support pension (“DSP”) and directed that the full amount of a second debt be recovered from Concetta Severino (“the Applicant”).

2. At a hearing before me on 22 June 2004, Ms Severino was self represented. Mr George Lozynsky, an advocate of the Centrelink Legal Services Branch represented the Secretary, Department of Family and Community Services (“the Respondent”). The documents provided by the Respondent pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (“the T documents”) were taken into evidence, as was the Respondent’s Statement of Facts and Contentions dated 30 May 2005 (Exhibit R1). Ms Severino gave oral evidence.

BACKGROUND

3.        Ms Severino was granted the DSP on 9 September 1993 in respect of a condition of cystic fibrosis.  In September 1995, a notice was forwarded to Ms Severino requiring her to inform Centrelink if her income exceeded $47.00 per week, this figure forming the basis on which her DSP rate was calculated.  In November 1997, she commenced casual employment with Grace Brothers (now called Myers) at Hurstville, an employment that continues to the present time. For a short period only, she had casual employment with another business.

4.        On 21 August 1998, Ms Severino was again advised, in the context of advice of an increase in DSP payment, that she must notify Centrelink in the event of an increase in income.  That letter does not refer to the income upon which her DSP was calculated.  On 29 October 2001, a data matching exercise undertaken by Centrelink and the Australian Taxation Office (“ATO”) indicated discrepancies in income declared by Ms Severino, and on 27 November 2001, her DSP was suspended on the basis that her income exceeded the allowable limit.  Over the ensuing 20 months, information was obtained by Centrelink from Ms Severino and Grace Brothers as to employment and income details, and on 9 September 2003, debts in respect of overpayment of DSP for two separate periods were raised by Centrelink.  These debts were in the amount of $8,513.76 from 9 July 1998 to 24 June 1999 and $18,297.93 from 7 July 1999 to 20 November 2001.

5. The decision by the delegate to raise these debts was affirmed by an ARO on 13 November 2003. Ms Severino lodged an appeal with the SSAT on 10 August 2004, but prior to the hearing, an ARO reduced the amount of the second debt from $18,297.93 to $16,382.89, following a recalculation based on payslips provided by Ms Severino. On 1 October 2004, the SSAT set aside the decision, determining that the balance of the first debt (Ms Severino having been paying off the debt through reductions in her DSP payments) on that day of $5180.66 be waived and that the second debt of $16,382.89 be recovered. The decision to waive the outstanding portion of the first debt was made under the provision of special circumstances pursuant to section 1237AAD of the Social Security Act 1991 (“the Act”). 

6.        The position of the Respondent at the start of the hearing was that whilst the decision of the SSAT to waive the outstanding portion of the first debt was not being contested, the evidence was such that the full amount of the second debt should be recovered, and there were no special circumstances warranting a decision otherwise. 

EVIDENCE

7.        Ms Severino, born in 1977, lives with her mother at Bexley.  She is presently in receipt of DSP, which was initially granted in 1993.  She completed her schooling in year 12 in 1995, subsequently undertaking a secretarial course.  She worked intermittently on a casual basis until obtaining casual employment on a regular basis with Grace Bros at Hurstville in November 1997.   In the early years after completing her schooling, her mother provided support, but since about 1998 she has “looked after herself” in respect of her employment, financial affairs and medical issues.  To the present, she lives with her mother; she did not dispute the contention of the Respondent that she does not pay for board and lodging.  Immediately prior to the hearing she completed an IT course.

8.        She could not recall receipt of the 4 September 1995 letter from Centrelink which provided advice of fortnightly DSP payments, and which required her to advise Centrelink should her weekly income, not including maintenance, exceed $47, but she accepted that she probably had received the letter.  At the time, she believed she was completing her schooling, and neither the content of the letter nor the income upon which her DSP payments were based would have had any significance.  As she said in evidence, $47 did not mean much. 

9.        The next communication to Ms Severino from Centrelink, as presented in evidence to the Tribunal at T6 page 25, was that of 21 August 1998.  It might be surmised that other formatted letters advising changes in pension rates for example might have been sent in the interim, but there is no evidence in that regard.  The letter of 21 August advised an increase in pension “because of the circumstances”, although those circumstances are not identified.  That letter further states “…if your income, not including financial investments or maintenance, increase;  if your income as shown above is incorrect; if you start work or recommence work…” as well as a raft of other matters which would require Ms Severino to advise Centrelink.   Of note, the letter does not show any income figure.

10.      An employment document completed by Grace Brothers on 18 August 2003 (T30 p68) confirms that Ms Severino commenced casual employment on 20 November 1997.  There is no dispute with that date.  In a letter to the Tribunal of 30 October 2004, Ms Severino stated that “prior to commencement with Grace Bros (now known as Myer) I did call Centrelink to notify them of my job, which I would be starting soon”.  In evidence she affirmed that she had done so, that she rang on the general Centrelink number, gave her name and identification, and that she was about to take up employment.   She could not recall any advice being given her as to any particular procedures she should follow.  In final submissions, the Respondent stated that there was no Customer Record Access Monitor (“CRAM”)  evidence of access to her Centrelink record between 1 October 1997 and 31 July 1998, and hence no record of any access or telephone call in respect of the forthcoming employment by Grace Bros in November 1997.   The Respondent stated that such access and a relevant notation would have been expected. 

11.      Ms Severino was advised by letter of 29 October 2001 that a comparison of Centerlink records with that held by the ATO had been undertaken; this indicating  that “you may have received income at the same time as you received social security payments” and that employment details would need to be checked, possibly with her employer.  Ms Severino was requested to telephone Centrelink to discuss the matter.  In evidence, Ms Severino said she could not recall the subsequent discussion, but that she had spoken to a Rose.  A file note at T20 p48 records a contact on 2 November 2001, and states “Advised that she had been working at GB’s Hurstville for a couple of years.  Ms Severino stated she was under the impression that she was earning under the allowable limit and did not have to advise Centrelink”.    In a letter of that date, Ms Severino was advised of her DSP payment rate ($305.10 including Pharmaceutical Allowance), this figure being based on an annual income of $10,140. 

12.      On 21 November 2001, Ms Severino advised Centrelink by telephone that she had commenced full time work with Tower Insurance (recorded at T14 p40 as being from 19 November 2001).   This start date is at odds with that given in oral evidence, wherein she stated she had worked at Tower, as the personal assistant to the security team dealing with staff entrants, from June to November 2001, with occasional weekends at Grace Bros.  She described her health at that time as “good”.   Resulting from her advice to Centrelink in respect of commencing full-time work with Tower, her DSP was cancelled. 

13. From 6 November 2001, Centrelink sought to obtain employment details from Grace Bros, initially through Myer Stores in Melbourne. It seems from the T documents that the first response, in spite of the efforts of Ms Severino to expedite the provision of data, occurred in a letter from Grace Bros Hurstville dated 31 January 2003. This provided gross and net fortnightly payment amounts for the 1998/1999 financial year. In the interim, Ms Severino was again informed by letter dated 17 December 2002 that the data-matching program with the ATO had indicated a difference in the order of $24,000 for the 1998/1999 year. Ms Severino stated that she was surprised to find that her returns of income to the ATO had not been passed to Centrelink, but thereafter she had declared her income to Centrelink each fortnight. As to the employment data requested by Centrelink, four further letters finally elicited a response of employment details and pay records from Grace Bros Hurstville on 18 August 2003.

14.      Ms Severino gave me a detailed account of her health considerations, and whilst there are no medical reports before me, I was left in no doubt as to the seriousness and significance of her illness. She described the condition of cystic fibrosis as affecting her life every day, making full-time or busy part-time work very hard, but she had sought from the outset to be independent.  She takes considerable medication, stating that could be up to 80 tablets a day, and her Pensioner concession card does not fully cover the high cost of her medication.  She receives support from the Cystic Fibrosis Association.  Her condition leads to periodic hospitalisation, two to three times a year, and maybe for 2 to 3 weeks, with periodic overnight stays for tests.  Her health is variable, and she stated that whilst she had informed the SSAT that her health at that time was “better”, she has subsequently been hospitalised for two months in 2005. 

SUBMISSIONS       

15.       Ms Severino accepted the calculation of the overpayments as determined by the Respondent.  She emphasised that she had not deliberately misled Centrelink as to her employment and income;  initially she had not given any thought to the income base advised by Centrelink and upon which her DSP payments were calculated.  These payments had commenced whilst she was still at school, and her early employment was of a casual nature.   She was also oblivious to the fact that DSP was affected by income.  She opined that there was no suggestion of deliberately ignoring the legislative requirements, nor was she careless, she just did not know.  In any event, she assumed that her income as advised to the ATO would be equally available to Centrelink.  She reiterated that her intent was to look after herself, and to do so, employment was appropriate.

16.      The Respondent re-affirmed that whilst the decision of the SSAT to waive the outstanding portion of the first debt was not being contested, the evidence was such that the full amount of the second debt should be recovered.  The Respondent submitted that it was the responsibility of Ms Severino to advise her income, and that had been made clear in the letters of 4 September 1995 and            21 August 1998.  She had provided evidence that she was able to look after herself, and this was evident in her periods of employment.  As to her position that she informed Centrelink in late 1997 that she was commencing employment with Grace Bros, there was no record of any such referral.  Even if she had done so, the onus was still on her to report changes in income and other relevant matters.  As to her reasons for not keeping Centrelink informed of her employment, the Respondent opined that there were a number of inconsistencies in her evidence. 

17. The Respondent submitted that the overpayment debts raised in respect of the two periods from July 1998 to November 2001 were valid debts for recovery, under the provisions of subsections 1223(5) and 1223(1) of the Act. The Respondent submitted that the debts could not be written off under the provisions of section 1236 of the Act, as the circumstances did not meet the criteria in respect of being irrecoverable by law, no capacity to repay, unknown whereabouts of the debtor or not being cost effective. Nor did the circumstances meet the criteria in section 1237A of the Act, there being no sole administrative error on the part of the Respondent. Ms Severino failed initially and in subsequent years to conform to the laid down requirements of informing Centrelink of changes in her circumstances, and even if she did not understand the instructions forwarded to her, she should have questioned Centrelink as to her responsibilities.

18. The Respondent submitted that there were no special circumstances whereby under the provisions of section 1237AAD of the Act, all or part of the debt might be waived. Citing Re Beadle and Director-General of Social Security (1984) 6 ALD 1, the Respondent submitted that the circumstances were neither unique nor special. In Re Secretary Department of Family and Community Services and Jonauskas (2001) 65 ALD 553, the tribunal found that failure to read the detail in notices sent to the applicant was not grounds for special circumstances, and nor was it in this matter. There was no suggestion of financial hardship. Drawing on Re Colaiacolo and Secretary, Department of Social Security (1985) AAT 2109, the Respondent submitted that the financial situation of Ms Severino was neither “exceptional” nor “straitened”.  She had no living costs by way of board and lodging, no significant debts and she remained employed. 

19.      The Respondent contended that being in poor health does not constitute special circumstances, and there is nothing unusual about recipients of DSP being in poor health (Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464; Re Secretary, Department of Social Security and VYS (1995) 40 ALD 745). The Respondent opined that there was ample evidence of the ability of Ms Severino to conduct her life and to hold down employment, albeit that she required medication the cost of which being minimised by the health care card. Finally the Respondent opined that the delays in identifying the extent of overpayment was in part the fault of Ms Severino herself in not providing timely and proper advice to Centrelink in order that her DSP payments could be made at the correct rate. In summary, there were no special circumstances.

LEGISLATION AND CONSIDERATION

20.      The relevant legislation has been referred to in defining the submission of the Respondent.  The overpayment debt relating to DSP payments, relates to two specific periods, and has been calculated from the data provided by the ATO in respect of annual income, employment and payment data provided by Grace Bros, payslips provided by Ms Severino, and a comparison with the income data upon which DSP payments were calculated and made.  That overpayment occurred is not disputed, nor is the calculation of that overpayment. 

21. I accord with the contention of the Respondent that the circumstances in this matter do not permit the debt to be written off as none of the criteria in section 1236(1) of the Act are met. The debt is recoverable by law, Ms Severino has the capacity to repay the debt (and indeed has been doing so for some time), and it is cost effective to recover that debt, it being $19,715.99 comprising $3333.10 from the first tranche (paid up to the date of the SSAT decision) and $16,382.89 from the second.

22. Section 1237A(1) provides the avenue to waive the right to recover the “proportion of the debt that is attributable solely to an administrative error made by the Commonwealth”, if the payments were received in good faith.   Relying on the Full Federal Court decision in Sekhon v Secretary, Department of Family and Community Services (2003) FCFAC 190, the Respondent submitted that for the debt to have arisen solely as a result of administrative error by the Commonwealth, there must have been no other factors contributing to that debt. That description ignores the proper interpretation of section 1237A(1) wherein a proportion (or the whole) of the debt may be considered. Notwithstanding that the debt is comprised of overpayment in two periods, the fact remains that Ms Severino was advised on 4 September 1995, by which time she had been in receipt of DSP for some two years, and again on 21 August 1998, by which time she was casually employed by Grace Bros, that she must advise changes in circumstances, including income and employment. In her evidence she conceded that she had probably received that advice but had not taken particular notice of its contents.

23. I well understand that a recipient of a social security payment has some difficulty in accepting the lengthy period between the commencement of an overpayment (in this case) and the advice from Centrelink that a discrepancy has possibly been identified after data matching with the ATO. In this instance, the first advice that such a situation had arisen was by letter to Ms Severino on 29 October 2001, some 3 years after the last advice given her (21 August 1998) as to her rate of payment, as shown in the evidence before me. Whilst that may or may not show tardiness on the part of Centrelink, and the absence of a figure for the base annual income in the letter of 21 August 1998 reflects poor staff work (and probably also confirms that the latter was not properly considered by Ms Severino), it does not lead to any conclusion that an administrative error by the Respondent was solely responsible for all or part of the debt. Thus the criteria in section 1236A(1) has not been met, and the residual debt cannot be waived.

24. Sections 1237AAD of the Act states:

“Waiver in special circumstances

The Secretary may waive the right to recover all or part of a debt if the Secretary is satisfied that:

(a) the debt did not result wholly or partly from the debtor or another person knowingly:
(i)       making a false statement or a false representation; or
(ii)       failing or omitting to comply with a provision of this Act or the 1947 Act; and  

(b) there are special circumstances (other than financial hardship alone) that make it desirable to waive; and

(c) it is more appropriate to waive than to write off the debt or part of the debt.”

25.      Ms Severino gave her evidence in a positive and realistic manner, and impressed as an honest applicant.  Whilst Centrelink has no record of a telephone call from her in November 1997 to advise her forthcoming employment with Grace Bros, I accept that she made such a call, but may well have not ensured that her details were understood and recorded; and she may well not have pursued the matter of understanding the implications.  Thereafter, and indeed in the two years when she was intermittently working as a casual employee prior to what amounted to the obtaining of  “permanent” casual employment with Grace Bros, there is no suggestion that she made false statements or false representations, nor did she knowingly fail or omit to comply when the provisions of the Act.

26. The issue at hand is whether special circumstances pursuant to section 1237AAD (b) of the Act were evident that makes it desirable to waive the right of the Commonwealth to recover all or part of the debt of $19,715.99. The SSAT identified a number of issues that led to its decision to waive the outstanding balance of the first debt, the philosophy being that it was appropriate to reduce the amount owing such that only one debt remained. As earlier noted, a portion of the first debt remained, albeit it had been paid off at that time.

27.      The Respondent has drawn on a number of authorities in support of the argument that a further reduction of debt would not be appropriate on the basis that Ms Severino’s circumstances are not special.  “Special circumstances” is not defined in legislation, but the interpretation put forward by the tribunal with Toohey J presiding in Re Beadle and Director General of Social Security (1984) 6 ALD 1, has been widely followed, and states:

"An expression such as "special circumstances" is by its very nature incapable of precise or exhaustive definition. The qualifying adjective looks to circumstances that are unusual, uncommon or exceptional. Whether circumstances answer any of these descriptions must depend upon the context in which they occur. For it is the context which allows one to say that the circumstances in one case are markedly different from the usual run of cases. This is not to say that the circumstances must be unique but they must have a particular quality of unusualness that permits them to be described as special."

28.      That tribunal went on to say (at 3) that "the existence of special circumstances is to be determined from all the circumstances ..." which in the context of the matter before that tribunal related to an application for handicapped child’s allowance.  That "all the circumstances" should be considered in this matter is supported by the words of the Full Federal Court in dismissing an appeal against the above decision (Beadle v Director-General of Social Security (and others) (1985) 7 ALD 670), wherein it was stated at 674 in respect of whether special circumstances were evident in the delay in making a claim "More difficult would be questions of ignorance, illiteracy, isolation, illness and the like. It would depend upon the circumstances of the particular case whether these constituted special circumstances. We do not think it possible to lay down precise limits or precise rules".   Such a view has been subsequently endorsed by the Full Federal Court in Dranichnikov & Ors v Centrelink & Ors (2003) 75 ALD 134 at 66 – 67.

29.      There are a number of issues that must be considered in order to determine whether the circumstances of Ms Severino are unusual, uncommon or exceptional.  Following Re Jonauskas (supra) and Re Secretary, Department of Family and Community Services and Clark (2004) 76 ALD 510, the onus is on the recipient of a social security payment to meet the obligations defined in periodic letters or advice from Centrelink. Ms Severino was in receipt of correspondence, albeit on only two occasions in a three year period, which required her to take note of her obligations and inform Centrelink accordingly. Particular clauses required her to notify Centrelink in the event that her income changed or she commenced or re-commenced work. Whilst she was but 18 years of age on receipt of the first letter, and her mother provided support, she seemingly ignored the instruction to “read the back of this letter …about your social security rights”.  The second letter however, whilst it gave the same instructions as to her responsibilities, failed to indicate the income upon which her DSP payment was being calculated. It might be argued that such an omission was of no real consequence given the general explanation as to her obligations. Equally, it could be argued that in the absence in that letter of a definitive weekly income upon which DSP calculations were based, Ms Severino could have assumed that Centrelink had knowledge – perhaps through the ATO – of her real income.

30.      Her ability to undertake a structured course and maintain casual employment, and for the period with Tower Insurance, full-time employment, is evidence in my view that she has the capability to be financially independent.  This is supported by the financial data obtained from the ATO, her employers and her pay slips.  Her periods in hospital may well have some bearing on the continuity of payment, particularly as she is employed on a casual basis, however the financial statement provided by Grace Bros on 31 January 2003 for the 1998/1999 financial year, reveals that with one exception, her fortnightly gross salaries were reasonably consistent.  She remains employed and has no significant debts, nor does she to date have a commitment to pay for board and lodging.  Whilst she has to meet medical costs beyond the scope of her health card, she is certainly not in “straitened” or unusual circumstances, and as she has demonstrated, she has the capacity to repay a debt over a period.         

31.      The health of Ms Severino is undoubtedly the most significant fact to consider.  There is no doubt that she suffers a debilitating disease, which in others might lead to an inability to cope.  That she does cope is evidence of her determination to pursue a normal life to the greatest extent possible.  In considering whether her ill health was in itself sufficient reason to meet the “special circumstance” criteria, the Centrelink position as affirmed by the ARO was in the negative.  The SSAT disagreed with this view, distinguishing Ms Severino’s case as special, and waived a part of the first debt accordingly. I have some difficulty in following the logic of the decision to consider only the first debt, given that Ms Severino was not informed of the data matching activity and the conclusions that resulted until 29 October 2001, which accords with the end of the period of the second debt. Nonetheless, I agree with the view of the SSAT that the health of Ms Severino warrants “special” consideration. I make that concession in the context of considering all the circumstances in this matter. I take account of the view of Senior Member Dwyer in Re YVS  (supra), that there is nothing special or unusual about recipients of DSP being in ill health, but I also take into account the significance of Ms Severino’s medical condition and the lack of definitive advice provided to her over a period of 6 years. In all the circumstances I find that special circumstances do exist.

32. I now have a similar difficulty as I have just mentioned in the context of the SSAT decision as to what should result from the finding of special circumstances. There is no doubt that Ms Severino must accept some responsibility for having failed to observe the general advice given in two letters from Centrelink as to her obligations in respect of social security payments and it was incumbent on her to check her circumstances with Centrelink. In that context she must accept some responsibility for the debt that occurred due to her payments of DSP being at an incorrect rate. So too, the specific advice required of the Respondent was lacking in that in a period of 6 years, Ms Severino was not advised as to the basis of calculation of her DSP payment rate. Accordingly I find it appropriate that the second debt be reduced by 50%, that is $8,191.45 of that debt is waived under the provisions of subsection 1237AAD(b) of the Act.

33.      The decision of the SSAT is set aside to the extent that whilst the outstanding balance of the first debt of $5,180.66 is waived, a further $8,191.45 of the second debt of $16,382.89 is waived.

I certify that the 33 preceding paragraphs are a true copy of the reasons for the decision herein of :

Signed:         Associate

Date of Hearing  22 June 2005 
Date of Decision     5 August 2005
Representative for the Applicant                    Self Represented    
Advocate for the Respondent     George Lozynsky